Late Selloffs Push Dow Down 29.18 : Market Overview

A late afternoon round of selling pushed stock prices sharply lower in another session marked by heavy trading in shares of International Business Machines. The Dow Jones average fell 29.18 to 3,255.18, with most of the drop coming after 2 p.m. Bond yields edged lower.

* Crude oil futures prices shot up on the New York Mercantile Exchange, led by a sharp rise in gasoline futures after an industry report showed a slowdown in U.S. refinery operations.

Stocks

Over the last two days, IBM has fallen more than 17%, dropping 4 1/4 Wednesday to 51 7/8. On Tuesday, the company announced a new round of job eliminations and said its dividend might have to be cut.

Many analysts trimmed their projections on Wednesday for IBM’s earnings in 1993.

More than 13 million shares of IBM were traded Wednesday, surpassing Tuesday’s strong volume for the stock by about 1 million shares. IBM’s recent average volume has been about 2.5 million shares per day.

Two other stocks that make up the Dow average also fell sharply Wednesday. Goodyear Tire & Rubber dropped 3 1/8 to 66 5/8, and 3M fell 2 to 102 3/8. The three stocks alone accounted for about two-thirds of the Dow’s drop.

In the broader market, declining issues outnumbered gainers by about 7 to 5 on the New York Stock Exchange on Big Board volume of 244.04 million shares, against 227.77 million on Tuesday.

The market ran into a wave of computer program-generated selling late in the session that was triggered by the expiration Friday for stock futures and options contracts, analysts said. The expirations can lead to wide prices swings in their related stocks.

“We’re going to see more volatility tomorrow and Friday,” said Robert L. Kahan, manager of equity trading at Montgomery Securities Inc. in San Francisco. “Once we get through (Friday’s expiration) the market should resume its upward trend.”

Among the market highlights:

* Two consumer products stocks were among the most active on the NYSE. RJR Nabisco was unchanged at 8 3/4 and Philip Morris, another Dow component, was down 7/8 to 76 1/4.

* Meanwhile, Intel Corp., a microprocessor maker, rose 6 1/8 to 83 1/2 on the NASDAQ market. The company said Wednesday morning that it expects its fourth-quarter results will surpass analysts’ estimates.

* Also on the NASDAQ, Immunex rose 1 to 46 1/4 after an agreement for American Cyanamid to buy 53.5% of the company and help create a new bio-pharmaceutical company. American Cyanamid, which is traded on the NYSE, was 1 3/4 lower at 56 1/4.

* Safety Kleen slumped 6 1/4 to 24 3/4 after the company indicated that there was weakness throughout its operations in the fourth quarter.

* Marquest Medical tumbled 2 to 3 3/8. The Englewood, Colo., medical products concern said it might file for bankruptcy protection if efforts to raise cash are unsuccessful. The company said it hopes to ease its liquidity problems through the sale of certain real estate.

Stock closed mixed in overseas trading. Share prices closed sharply lower on the Tokyo stock exchange. The 225-issue Nikkei average fell 212.03 points, ending the day at 17,268.71. The Frankfurt 30-share DAX average closed down 9.17 points at 1,472.07, weighed down by gloomy news from auto makers Volkswagen and Daimler-Benz. However stocks finished higher in London, with the Financial Times 100-share average rising 14.9 points to 2732.8.

Commodities

January deliveries of light, sweet crude oil climbed 46 cents to $19.41 a barrel; January unleaded gasoline soared 2.26 cents to 54.59 cents a gallon; January heating oil rose 1.72 cents to 55.50 cents a gallon; January natural gas fell 2.5 cents to $2.072 per 1,000 cubic feet.

The rally in oil prices followed a weekly American Petroleum Institute report released late Tuesday that showed a 3.2 percentage point drop in refinery runs last week to 86.5% of capacity. Traders had expected a drop of about 1 percentage point.

The report also showed declines in U.S. stocks of gasoline and petroleum distillates, which include heating oil, and a rise in crude stocks.

The market got an additional boost from talk that Nigeria will cut its OPEC oil production quota by 10% and other OPEC members will also reduce crude production, but analysts were skeptical.

The higher oil prices helped support precious metals on New York’s Commodity Exchange, said William O’Neill, senior futures strategist with Merrill Lynch Futures.

He said most of the rally was because of technical factors and buying related to moves in the gold options market.

Gold bullion for current delivery settled at $337.90 an ounce, up $3.40 from Tuesday.

Silver bullion for current delivery settled at $3.730 an ounce, up from $3.691 on Tuesday.

Credit

Treasury yields edge lower after traders decided that President-elect Bill Clinton will not overstimulate the economy enough to prompt a tightening by the Federal Reserve of short-term interest rates.

The 30-year bond’s yield finished the day at 7.43%, down from 7.44% late Tuesday.

Its price, which moves inversely to its yield, was up 3/16 point, or $1.88 per $1,000 in face amount, around midday.

Prices went up for the second consecutive session “as people become more comfortable with the prospects of modest or no stimulus, and no tightening of Fed policy,” said Robert Giordano, chief economist at Goldman Sachs and Co.

Meanwhile, the Federal Reserve said industrial production increased 0.4% in November, the second straight advance. The October number was revised to a 0.5% gain, up from 0.3%.

Currency

The dollar settled mostly lower on world currency markets, where the Japanese yen dominated trading.

Analysts said the dollar sold off overnight in foreign markets, and the selling continued when trading shifted to the United States. “The downside looked like the path of least resistance,” said Marc Chandler, an analyst with the advisory firm IDEA.

In New York, the dollar closed at 122.95 Japanese yen and 1.558 German marks, down from 123.95 yen and 1.569 marks respectively on Tuesday. The British pound was quoted at $1.575 in London, up from $1.568 late Tuesday.

Market Roundup, D6